Kentucky Bankruptcy Law

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Phone Adventures or “How does one get an “Account Transcript” from the IRS?”

This post is geared more towards attorneys practicing bankruptcy law, but it is useful to anyone trying to resolve income tax debt. I am following up on my last post about how to determine if income tax debt can be discharged in bankruptcy. First, as an attorney, you have to complete and have your client sign a Power of Attorney, Form 2848. Well, actually you have to back up a step further and obtain a CAF number from the IRS. You will need that CAF number in order to get anywhere with them.

Once the 2848 is completed, you send it in to the IRS so that they can either lose it or take weeks to process it. Oh, but do not worry, you can still proceed. You next want to get a Form 4506-T completed. You really should do this at the same time as the 2848 to save time. There are fax numbers of the back of the 4506 to send it to  and you only have to try that fax number a dozen or so times. More recent years can be obtained by calling the automated number for the IRS, but the transcripts can only be sent directly to the taxpayer’s address if you go that route.

Once the Account Transcripts come in, you need to look for those “520” codes I mentioned in the last post. If there are any on the transcripts, you will want to spend a leisurely afternoon on the phone listening to the Internal Revenue Services music interrupted by occasional transfers to different departments. Once you get to the right place, you will be grilled about who your are. They will look in the system and fail to find the 2848 that you had dutifully sent in per the instructions. Just go ahead and have a copy of the 2848 at hand because the person helping you will ask you to fax it directly to them.

Once that 2848 is in front of them, they will ask you to repeat information that is clearly spelled out on the form itself to “verify” things. It seems this only verifies that you faxed them the very same document they are looking at, but no matter. Now you are cooking with GAS – well, perhaps kerosene. It will just take a few seconds to get the closing code. If you want to forgo this whole experience, then look for a code “971” and see it there is one whose dates corresponds to the “520”. If so, you are safest to assume that the closing code is 77.

PS: By the by, attorneys, this is a time intensive and liability laden analysis, so be sure to charge separately from the bankruptcy for this procedure.

PPS: Be sure to get your client’s dates of birth – the IRS sometimes asks for this to verify that you are whom you say you are.

January 28, 2014 Posted by | Bankruptcy, Chapter 13, Chapter 7, Planning, Pre-filing planning, Tax Debts | , , , , , , , , , , , | 2 Comments

Discharge tax debt? Yes, you can…

I had a phone conversation just last week with an attorney who was surprised to learn that income tax debt can be discharged. I guess he had not read my prior post about this topic. The mistaken belief that tax debts are with you forever is prevalent with lay people and attorneys alike. The bankruptcy code takes one through a bit of a maze to figure out if the tax debts in question are capable of discharge. The code provisions include: 11 USC Sect 507(a)(8)(A)(i) & (ii), 523(a)(1)(B) & (C), 1328(a)(2).

The condensed summary of these provisions includes:

  1. The due date for the tax return was three years ago or more.
  2. The tax return was actually filed two years ago or more.
  3. The tax assessment occurred 240 days ago or more or has not yet occurred.
  4. The tax return was not fraudulent.
  5. The taxpayer did not engage in tax evasion.

One needs to obtain a tax “Account Transcript” to be sure to calculate these requirements because certain things can “toll” or stop the running of these times.

July 27, 2012 Posted by | Bankruptcy, Chapter 13, Chapter 7, Planning, Pre-filing planning | , , , , , , , , | Leave a comment